Glimmer of Turnaround: Why the Ad Market Recovery Matters
Gannett's Profit Jumps 52% on Strong Television Ad Sales. The Gannett Company said Tuesday that its third-quarter profit increased 52 percent as advertising sales at its television stations rose and costs fell. By Bloomberg News. [New York Times: Business] This follows on the heels of Yahoo announcing great ad sales numbers (bolstered by Yahoo's Overture economy) and Rupert Murdoch touting an ad recovery.
If the ad market does indeed recover, its important for two reasons:
1. Ad Spending correlates with GDP
2. Advertising Drives the "Multimedia Cycle"
Just as potential customer spending drives advertising expendtitures, Ad spending drives the development of content to create ad space. Development of content drives spending telecommunications services to delivery it. Development of telecommunications services requires investment in applications and infrastructure.
In other words, the strength of the advertising market reflects percieved strength of consumer markets and drives capital spending in a significant portion of the telecommunications sector.